Boeing posts Q3 results in line with low expectations, IAM vote looms today

Boeing's Q3 earnings report showed mixed results, with revenue coming in at $17.84 billion, just below the $17.89 billion consensus estimate, while its core loss per share of $10.44 slightly missed the expected $10.35. the results were generally in line with its guidance provided two weeks ago.

The company reported a negative adjusted free cash flow of $1.96 billion, which was worse than the estimated negative $1.87 billion. Pre-market trading saw Boeing's stock down 0.4%, reflecting investor concerns over these results. Despite these challenges, Boeing's total company backlog remains robust at $511 billion, including over 5,400 commercial airplanes, indicating long-term demand.

The Commercial Airplanes segment reported revenue of $7.44 billion, missing estimates of $7.66 billion, and an operating loss of $4.02 billion, wider than the expected $3.15 billion loss. This segment was impacted by previously announced pre-tax charges of $3 billion related to the 777X and 767 programs, along with the effects of the International Association of Machinists (IAM) work stoppage. Despite these challenges, Boeing booked 49 net orders and delivered 116 airplanes during the quarter, maintaining its plan to increase 787 production to five per month by year-end.

Boeing's Defense, Space & Security division posted Q3 revenue of $5.54 billion, slightly below the estimate of $5.6 billion, with an operating loss of $2.38 billion compared to expectations of a $1.94 billion loss. The segment was hit by $2 billion in pre-tax charges across several programs, including the T-7A, KC-46A Tanker, and MQ-25, along with unfavorable performance on other projects. However, notable deliveries during the quarter included the first production MH-139A to the U.S. Air Force and two E-7A Wedgetails.

In the Global Services segment, revenue increased by 2% year-over-year to $4.9 billion, though it missed estimates of $5.02 billion. Operating margin came in at 17%, slightly below the anticipated 17.2%. The segment benefited from higher commercial volume and mix, and Boeing secured significant contracts, including agreements with All Nippon Airways and a KC-135 spares contract from the U.S. Air Force.

Boeing’s financials continue to reflect the impacts of ongoing challenges, including supply chain disruptions and program-specific issues in both the commercial and defense segments. The IAM work stoppage also negatively affected operating cash flow, which came in at negative $1.35 billion, though this was better than the anticipated negative $1.99 billion. The company reiterated that it is taking steps to stabilize operations and improve long-term performance.

Despite the operational setbacks, CEO Kelly Ortberg emphasized the company’s long-term potential, stating that Boeing is focused on transforming its culture and improving program execution. Boeing’s extensive backlog and its continued progress on high-priority defense and commercial contracts provide a solid foundation for future growth.

Later this morning, the IAM is expected to vote on the latest proposal by BA management. The results were largely in line with expectations so the vote on a new deal could supersede the earnings numbers provided by BA,

Overall, Boeing's Q3 results reflect ongoing challenges across its business segments, with significant charges weighing on performance. However, the company’s strong backlog and focus on improving execution offer some optimism for future quarters, even as it navigates short-term difficulties. The stock's slight dip in pre-market trading reflects a cautious market reaction to the company's mixed performance.